(News Bulletin 247) – The CAC 40 confirmed its return to 7,300 points on Wednesday evening at the close, in reaction to inflation figures in line with expectations in the United States for the month of July.

The Paris Stock Exchange continues its rise after new statistics showing a slowdown in prices in the United States last month.

The CAC 40 actually rose by 0.79% to close at its highest point of the day, at 7,333.36 points. The most anticipated publication of the day and even of the week, in this summer break on the markets, reassured investors.

The American inflation figures for the month of July confirm the drop in inflationary pressures, following the announcement of a favourable trajectory for wholesale prices across the Atlantic.

In July, US consumer prices rose 2.9% year-on-year, after 3% in June. They are back to their lowest level since March 2021, and this slowdown is greater than expected, since economists surveyed by the Wall Street Journal had expected a figure of 3% year-on-year. Over one month, inflation rose to 0.2% in line with expectations.

Core inflation, that is, excluding food and energy prices, is also in line with the consensus at 3.2%, according to data from the Bureau of Labor Statistics. And it is especially a little less than the 3.3% of June.

“The data probably helps build trust among officials [de la Réserve Fédérale américaine] in the disinflation process, with price pressures continuing to move closer to the 2% target,” notes Michael Brown of Pepperstone.

While a rate cut is now a given for September, the main question animating the markets is whether the Fed will cut rates by a quarter or half a percentage point. And inflation figures released on Wednesday tipped the balance in favor of one scenario.

According to the CME Fed Watch tool, the probability that the Fed will proceed with a rate cut of a quarter of a percentage point has risen to 60.5% against 47% the day before, while the markets are now only 39.5% to envisage a more pronounced movement (0.5 percentage point) against 53% on Tuesday.

“Although market participants continue to argue over whether this cut will be 25 or 50 basis points (0.25 or 0.5 percentage points), a more modest move of 25 basis points seems a reasonable first step on the path to policy normalization, with a larger cut likely to be a sign of panic at this stage,” the strategist continued.

Please note that the Paris Stock Exchange will be open on Thursday, August 15, but volumes are likely to be anemic.

Valneva keeps its form, Innelec disappoints

On the business side, there is still little news during this summer break. Innelec fell by 7%, after announcing a sharp decline in its turnover in the first quarter of its staggered 2024-2025 financial year.

Valneva gained 5.1%, still sought after since the announcement on Tuesday of a return to profits in the first half. The day before, the laboratory’s share price had already gained 7.8%.

On the foreign exchange market, the euro appreciated by 0.3% to 1.1028 dollars after the publication of inflation data in the United States. Slightly higher at midday, oil prices turned downward, after an unexpected increase in weekly crude inventories in the United States.

The price of a barrel of North Sea Brent crude for delivery in October fell by 0.3% to $80.42, while that of WTI crude for delivery in the same month rose by 0.9% to $77.62.